Question

#11 Journalize the following transactions in june

4       Willem Corporation purchased $4,000 worth of merchandise, terms 2/10, n/30 from Cate Corporation. The cost of the merchandise to Cate was $2,600.

10       Willem returned $700 worth of goods to Cate for full credit. The goods had a cost of $450 to Cate and were placed back into inventory

26       Willem paid the account.

Answer 1

Ans ) Journal entries are as follows:
In the Books of Willem Corporation
Sl No.	Date	Particulars		Debit Amount($)	Credit Amount($)
1	04-Jun	Purchases A/c Dr		4,000
		To Cate Corporation A/c			4,000
		(Being merchandise purchased on credit)
2	10-Jun	Cate Corporaton A/c Dr		700
		To Purchase Return A/c			700
		(Being goods returned of $700)
3	26-Jun	Cate Corporation A/c Dr		3,300
		To Bank A/c			3,300
		(Being amount paid to the party)
Note: Being amount paid after 10days, therefore no discount received by the buyer "Willem Corporartion".
In the Books of Cate Corporation
Note: There are two methods of accounting for discounts in the books of seller:- A)Net Method, and B)Gross Method.
Method A) Net Method
Sl No.	Date	Particulars		Debit Amount($)	Credit Amount($)
1	04-Jun	Willem Corporation A/c Dr		3,920
		To Sales Revenue A/c			3,920
		(Being goods sold on credit and recorded at sale price less cash discount)
		($4000-[$4000*2%])
2	10-Jun	Sales Return A/c Dr.		686
		To Willem Corporation A/c			686
		(Being goods returned by the buyer)
		($700-[$700*2%])
3	26-Jun	Bank A/c Dr ($4000-$700)		3,300
		To Interest Revenue A/c			66
		To Willem Corporation A/c			3,234
		(Being amount paid by the buyer)
Method B) Gross Method
Sl No.	Date	Particulars		Debit Amount($)	Credit Amount($)
1	04-Jun	Willem Corporation A/c Dr		4,000
		To Sales Revenue A/c			4,000
		(Being goods sold on credit and recorded at sale price)
2	10-Jun	Sales Return A/c Dr.		700
		To Willem Corporation A/c			700
		(Being goods returned by the buyer)
3	26-Jun	Bank A/c Dr ($4000-$700)		3,300
		To Willem Corporation A/c			3,300
		(Being amount paid by the buyer)